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Dear SME owner, how au fait are you with the Companies Act, 2008? Do you know that the memorandum of incorporation now takes precedence over the terms and conditions of the shareholder’s agreement?
In terms of the previous Companies Act, the terms and conditions of the shareholders’ agreement was sufficient to vary and to override the provisions of a company’s memorandum and articles. Not anymore. The only way a MOI may be amended is by effecting a formal change thereto and registering such with the Department of Trade and Industry.
What are the risks to you given the above? Well, for more information on the memorandum of incorporation and how such affects shareholders, directors and shareholders’ agreements, please read the more substantive article available here:
Article written by Shamrita Singh, CEO of SITL Legal (www.sitllegal.co.za) and Joint CEO of the Legal Agreements JV (www.legalagreements.co.za), e-mail firstname.lastname@example.org. The website www.legalagreements.co.za is a pioneer and innovative site in the offering of digital legal solutions to smmes and in-house counsel.
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